State report says tax abatements for developments should be granted only when public at large will benefit, not just municipal governments

Thursday, August 19, 2010

By MELISSA HAYES

JOURNAL STAFF WRITER

Tax abatements have become the method of choice to compete
for development and generate revenue for a number of Hudson
County municipalities, according to a report released
yesterday by the state Comptroller's Office.

The 30-page report, which calls for reforming the state
law that governs the tax breaks, notes "significant
use" of abatements in Bayonne, Harrison, Hoboken,
Jersey City and Union City.

The abatements were originally created to spur development
in blighted areas, such as what existed on the Jersey City
waterfront in the 1970s before the LeFrak Organization was
given long-term tax breaks to build Newport.

But the city's waterfront, now flush with high-rise
buildings, is still designated as an area "in need of
redevelopment," allowing for continued use of
abatements, the report notes.

"Standards concerning these designations seem to be
loosely applied and rarely reviewed," the report
states.

It also notes that short-term abatements have been given
to developments that were already completed.

Mayor Jerramiah T. Healy defended the city's use of
abatements yesterday, saying the tax breaks helped Jersey
City become "the economic engine of the state."

"As we continue to compete with places like New York
City and Brooklyn to attract high-profile companies to our
city, we will continue to judiciously use tax abatements to
foster growth and jobs in our city," Healy said in a
statement.

But unlike conventional taxes, which are shared with local
public schools and county government, 95 percent of
tax-abatement money is spent on municipal government.

"When the entity in charge of deciding who receives a
tax break knows it will profit from its decision regardless
of its merits, that's a recipe for poor
decision-making," state Comptroller A. Matthew Boxer
said in a statement.

"Abatements should be granted only when the public at
large will come out the winner."

The report notes that the City of Bayonne granted an abatement to a power station in November that would generate $45 million in payments in lieu of taxes to the city over 30 years....